The purchase consideration for residential immovable property should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE or FCNR accounts maintained with banks in India.

Foreign citizens of Indian origin needed to file a declaration in Form IPI 7 with the Central Office of Reserve Bank, Mumbai within 90 days from the date of purchase of immovable property, or final payment of purchase consideration. They will also need a certified copy of the document for the proof of transaction and a bank certificate regarding the consideration paid. Such property can be sold without the permission of Reserve Bank. If foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE or FCNR accounts. Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties, purchased on or after 26^th May 1993. The balance amount of sale proceeds or sale proceeds in respect of properties purchased prior to 26th May 1993 will have to be credited to the ordinary non-resident rupee account of the owner of the property.

As far as the matter of repatriation is concerned, applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for necessary permission for remittance of sale proceeds should be made in Form IPI 8 to the Central Office of Reserve Bank at Mumbai within 90 days of the sale of the property.

Reserve Bank has granted general permission to foreign citizens of Indian origin to attain or dispose of properties up to two houses by way of gift from a relative or to a relative, who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws. Immovable property held in India can also be transferred by way of gift to registered charitable trusts or organizations in India. General permission has been granted by Reserve Bank to non-resident persons of Indian origin regarding this. Foreign citizens of Indian origin can acquire commercial properties in India. Under the general permission granted by the Reserve Bank, properties other than agricultural land, farm house, plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward transfer of funds in foreign exchange through normal banking channels or out of funds from the purchasers’ NRE or FCNR accounts maintained with banks in India. A declaration is submitted to the Central Office of Reserve Bank in Form IPI 7 within a period of 90 days from the date of purchase of the property or final payment of purchase consideration.

The law covers only purchase of residential and commercial property and not for purchase of land for agriculture or plantation or for farm house in India. NRI/PIO can not acquire agricultural land or plantation property or farm house in India. Since rules are not available to an NRI/PIO to acquire agricultural land or plantation property or farm house in India, such proposals will require specific approval of Reserve Bank and the proposals are considered in consultation with the Government of India. However, an NRI / PIO who has acquired residential or commercial property under law are not needed to file any documents with the Reserve Bank and there are no restrictions on the number of residential or commercial properties that can be purchased.

A foreign national of non-Indian origin can not be a second holder and can not acquire to immovable property purchased by NRI or PIO. But, he or she may take residential accommodation on lease provided the period of lease does not exceed five years. In such cases, there is no requirement of taking any permission from Reserve Bank. Foreign national who is resident in India can purchase immovable property in India. But the person concerned would have to obtain the approvals, and fulfill the requirements if any, prescribed by other authorities, such as the concerned State Government, etc However, a foreign national resident in India who is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank. Such requests are considered by Reserve Bank in consultation with the Government of India.

A foreign company which has owned a Branch Office or other business place in India, in accordance with FERA / FEMA regulations, can acquire any immovable property in India, which is compulsory for or subsidiary to carrying on such activity. The payment for acquiring such a property should be made by way of foreign inward remittance through proper banking channel. A declaration in form IPI should be filed with Reserve Bank within ninety days from the date of acquiring the property. Such a property can also be mortgaged with a certified Dealer as a security for other borrowings. On winding up of the business, the sale proceeds of such property can be sent back only with the prior approval of Reserve Bank. Further, possession of immovable property by entities that had set up Branch Offices in India and incorporated in Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan would require prior approval of Reserve Bank to acquire such immovable property. However, if the foreign company has established a Liaison Office, it can not acquire immovable property. In such cases, Liaison offices, can take property by way of lease not exceeding 5 years.Immovable property in India can be acquired by way of gift. NRIs and PIOs can easily acquire immovable property by way of gift from resident of India or from NRI or from PIO. However, the property can only be commercial or residential. Agricultural land or plantation property or farm house in India cannot be acquired by way of gift. A foreign national of non-Indian origin resident outside India cannot acquire any immovable property in India through gift.

A non-resident can inherit and hold immovable property in India from a person who was resident in India. However, a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan should seek specific approval of Reserve Bank. A person resident outside can inherit immovable property from resident of India or outside India. However, the person from whom the property is inherited should have acquired the same in accordance with the foreign exchange policy appropriate at that time.